As Britain prepares to part with the EU, it is more important than ever for UK start-ups to be aware of the financial support on offer in order to maintain a competitive advantage.
The Government offers competitive incentives to encourage business growth, development and to be one of the best places to start and grow a business. The Research and development tax credit is one area of Government support that is being increasingly adopted by UK businesses, providing a cash boost to companies that can prove the involvement of innovation into their business practices.
The concern is however, whether the scheme is successfully kick-starting innovation among smaller businesses and start-ups. A recent survey conducted of 1,000 UK business leaders ranging from start-ups to larger corporations, found that only 5% of small businesses with 1-50 staff members had used R&D tax credits, compared to half of all larger businesses employing more than 500 staff.
This indicated that currently the R&D tax credit incentives are doing more for large businesses than for small businesses. This goes against one of the significant purposes of the incentive, as it is intended to be significantly weighted in favour of small businesses in its generosity.
Does your SME qualify?
A small and medium enterprise could qualify for the R&D tax credit if it has fewer than 500 staff, its turnover does not exceed €100m and its gross assets do not exceed €100m. Such businesses could claim back up to 33.33% for every £1 spent on qualifying R&D activities.
- Have activities been carried out that differentiate the business within its sector?
- Has the business taken on something particularly challenging?
- Have risks been taken trying to achieve the innovative activities?
- Has time and effort been invested into efficiency gains?
- Does the business operate in a market that is specialised, niche or heavily regulated?
- Does the business employ highly skilled and qualified technical staff?
How to apply for R&D tax credits?
The most efficient and effective way is to acquire an R&D tax credit specialist to guide you through the process. This ensures the application is lodged accurately and in accordance all legislation and requirements.
Currently the average R&D tax credit claim is £54,000, which can prove as a valuable source of funding for start-ups. Claims are usually paid within six weeks of submission; therefore the process is not drawn out.
If you believe your company could be eligible to receive an R&D tax credit, contact a Swanson Reed R&D tax specialists for a free assessment. We look forward to speaking with you and guiding you through the process of attaining your tax relief.